Between 2008 and 2012, the energy shots category took off like a rocket, experiencing 168% growth over that period, said a recent report from Rockville, Md.-based Packaged Facts research company.
But, as with most products, growth has begun to slow down as the category has been maturing. Proof of that maturation can be seen in the fact that, in the last six months of 2012, energy shot package sales rose only 4%, noted Bob Falkenberg, founder of Alpharetta, Ga.-based research firm BeveragePulse.com.
Of the 246 million units sold during that period, 206 million of them were from category-owner Living Essentials’ 5-hour Energy, Falkenberg said. This is not to say that consumers are getting tired of energy shots.
Energy shots are a $1.3 billion business, according to Jamil Satchu, a partner with Symphony Consulting, part of the SymphonyIRI Group market research company.
At Tedeschi Food Shops, pink lemonade 5-hour Energy had the fastest take-off of any of the flavors, aside from the rollout of the original, said Michael Turco, category manager for the Rockland, Mass.-based chain. But, said Falkenberg, line extensions are not likely to broaden the category appeal over the long-haul. In fact, too many flavors can easily lead to cannibalization in the category.
Kera Smith, merchandising specialist for Emmaus, Pa.-based Top Star Express convenience stores noted that the increase in energy shot sales in her stores has been slight (“not nearly as drastic as we had seen in past years”). But, she noted, the introduction of new flavors and four packs has helped to keep sales high.
Top Star Express runs approximately 2-3 promotions a year on energy shots and/or energy shot four packs, said Smith. “These promotions are effective for us because they entice new customers to try the product for a discounted retail.”
Mintel reported that, while private labels have not impressed energy drink consumers, they have been showing dollar sales growth in the energy shots segment.
So, while no one is likely to knock 5-hour Energy off its top perch anytime soon, private label shots that imitate the branded products very closely—both in look and functional claims—can be a profitable part of the category mix.